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Investment/M&A History

Aladdin Acquisitions

In July 2001, Aladdin acquired certain assets (and assumed certain liabilities) of Preview Systems, Inc.'s electronic software distribution business for $5.2 million. In conjunction with the acquisition, Preview granted us worldwide, non-exclusive licenses with the right to sublicense the products we purchased from them. We have the exclusive rights to use the Preview Systems trademark and the Preview trademark and logo has been assigned to us. In addition, we market the Preview products under our HASP line of products.
In February 2000, Aladdin acquired all the outstanding shares of our independent distributor in France, Aladdin France S.A. for $678,000, and certain eSafe related assets from Commerce Technologe International for $370,000. We then merged the two operations into one single wholly-owned subsidiary, Aladdin France S.A.
In March 1999, Aladdin acquired a substantial amount of the assets of Micro Macro Technologies Ltd. Micro Macro develops and markets token-based software security systems primarily for Macintosh software developers. At the time of our acquisition Micro Macro was in the process of liquidation and we paid the receivers $700,000 for its assets.
In December, 1998, Aladdin signed a strategic agreement with Athena Research Ltd. (our former partner in Aladdin Knowledge Systems Japan Co.), under which we formed a joint venture named Athena Smartcard Solutions Ltd. which develops and markets smartcard solutions based on our Smartcard Environment (ASE) technology. Pursuant to this agreement, we granted Athena Smartcard Solutions a non-exclusive, perpetual license (that became an exclusive perpetual license under a technology license agreement entered into between us and Athena effective as of May, 2001) to use the ASE technology and all related intellectual property, and Athena Smartcard Solutions assumed all of the responsibilities for our ASE related business, including marketing, sales and customer support. We ceased all of our in-house activities with respect to the ASE technology field. Athena Smartcard Solutions issued us shares representing 33% of its total issued and outstanding shares. Between December 1998 and December 31, 2002, we provided Athena loans in the aggregate amount of $2,383,000. In the first half of 2003 we provided Athena with an additional $100,000 loan.

On March 28, 2001, we converted $1,053,000 into a convertible bond redeemable at the earlier of five years from the date of grant or at such time as Athena completes an equity financing in the amount of $2 million. The bond is convertible into 53 Athena Class A preferred shares, par value JPY 50,000 (approximately $420) per share. The remaining $1,430,000 constitutes long-term debt. We entered into an agreement with Athena concerning the repayment terms of such long-term debt. Part of the understanding reached with Athena was that in addition to the repayment of our loans, Athena will pay us royalties with respect to their future product sales. As of May 31, 2003, we own 35.71% of Athena and the aggregate outstanding debt owed Aladdin by Athena is $2,483,000. We have made a provision in our financial statements with respect to the likelihood that Athena will be able to repay its debt to us.

Aladdin Investments

On May 24, 2004, Aladdin announced a $1 million investment in C-Signature, a new biometric company creating innovative authentication and identity management technology. Through this strategic investment, we gained 19.9 percent equity in C-Signature and a license to sell products based on C-Signature technology. The investment builds on the capabilities of Aladdin's existing eToken authentication solution, an award-winning USB smart card authentication device. Products based on the new technology have an expected 2005 release date.
On October 2, 2000, Aladdin's Board of Directors approved a plan to repurchase ordinary shares in our company in the amount of $3 million. Through 2001, we spent $1,163,904 on the repurchase of 224,100 ordinary shares after which we stopped repurchasing the stock in our company.
In February 2000, Aladdin entered into a Strategic Investor Agreement pursuant to which we agreed to commit $10 million to Tamir Fishman Ventures II LLC. Together with our US subsidiary, as of May 31, 2003 we have invested a total of $4,150,000 in Tamir Fishman Ventures II (Israel) L.P. and in a Delaware limited partnership related to Tamir Fishman Ventures II LLC, which represents close to half of our total commitment to these entities.
On December 29, 1999, we purchased shares representing 7.18% of the outstanding shares of Comsec Information Security Ltd., an Israel-based information security-consulting firm, for approximately $1,722,050. In February 2000, Comsec consummated an initial public offering. The fair market value of our investment in Comsec as of December 31, 2002 is $572,000.
Effective December 31, 2000, we converted a Subordinated Promissory Note in the amount of DM 18,311,791.96 (US $8,708,220) into 1,741,644 Series C preferred shares in FAST Multimedia Inc., which represents 11.93% of the outstanding share capital of FAST Multimedia Inc. We received the promissory note as part of our acquisition of FAST Software Security AG in 1996. We consented to the transfer of the payment of the principal of the promissory note from FAST Software Security AG to its parent company FAST Multimedia Inc. on January 19, 2001. In connection with the purchase of FAST'S digital video editing hardware and software business, Fast Multimedia Inc. purchased a promissory note issued by FAST in the aggregate principal amount of DM 2.5 million ($1.6 million). This note was repaid by FAST in June 1995 through the sale by FAST to FAST Multimedia Inc. of certain subsidiaries of FAST. In 2001, we wrote off our portion of the FAST note in the aggregate amount of $3,350,000. At the end of 2001 FAST Multimedia was acquired by Pinnacle Systems. In May 2002, we received $261,000 as our share of this deal.